Despite a downward correction, with the International Coffee Organistion (ICO) composite indicator price falling from 142.99 cents per pound on July 1 to 132.17 cents per pound on July 31, coffee remained firm in the international market in July. The July monthly average stood at 132.78 cents per pound compared to 130.51 cents per pound in June. This firmness reflects the general increase in prices of agricultural and mineral commodities. In response to these rising price levels, retail prices have been going up in most importing countries, the recent ICO report said.
The overall minor increase in prices during July was more marked in the case of Robusta (3.5%), with only a slight degree of volatility. The crop year of 2008-09 has already begun in Brazil and in other exporting countries. The volume of opening stocks in Brazil on April 1 2008 was 11 million bags, the lowest level seen in many years.
According to CONAB, Brazil?s crop estimate wing, Brazilian production in the new crop year is estimated at 45.5 million bags. ?The weakness of the US dollar in relation to some currencies and the increase in the cost of inputs and labour are obstacles to the development of coffee in many exporting countries,? said the executive director of the ICO, in a statement.
In these circumstances, it is unlikely that the volume of world production will be as large as some sources suggest for the crop year 2008-09, even though this is a year of high production in the two-year Brazilian crop cycle.
According to ICO?s executive director?s projection, the world production for 2008-09 would touch 128 million bags. With regard to the crop year 2007-08, the level of total production is unchanged at 118.1 million bags, a fall of 6.6% compared to 2006-07. Exports for the first nine months of 2007-08 (October 2007 – June 2008) totaled 71.29 million bags compared to 74.52 million bags for the same period in 2006-07, representing a fall of 4.3%. The value of exports during the calendar year of 2007 was estimated at $12.7 billion for 96 million bags.
